What are the Different type of Bank Acounts?

Types of Bank Accounts Explanation in Detail

There are so many types of bank accounts that one might get confused in where they should keep their money. Different bank accounts serve different purposes. So, if you have a particular goal while keeping your money in a bank account, then you should choose the account which will help you to achieve that goal. Because there are so many types of bank accounts, having a clear-cut idea of which account is used to serve which purpose, will help you to know where you should be investing.

What Are the available Types of Bank Accounts?

Generally, there are four types of bank accounts which are:

Savings Account

A savings account is used mainly for saving the money. Any person can open a savings account either individually or jointly with another person. The advantage of a savings account is that you can withdraw your money at any time you want and the bank will also pay interest on your savings. Also, there are no restrictions on how many times one can deposit or withdraw money from the savings account. However, there are certain conditions on the amount of money one can withdraw from the savings account. 

Some banks want the account holder to maintain a minimum amount of balance on their saving account, unless, they might charge the account holder. A savings account is mainly used by:

•       Salaried Persons
•      Pensioners
•        Students
•        Housewives
•                                                         And Many Others 

Recurring Deposit Account

Recurring deposit or RD account is for those individuals who want to save money for a certain amount of time and earn higher interest on their savings. 

In an RD account, the individual has to deposit a specified amount of money for every month for a fixed period of time. At the end of the time period, the individual will get that money back along with the interest earned. 

The deposit time ranges from 6 months to 10 years. The individual cannot withdraw the money during the specified time frame. Though, the bank will allow you to close the account if you want to.

Current Account

Current accounts are primarily operated by business personnel, companies, firms, public enterprises, online payment requiring entities and many others. 

This type of account is not used for saving purpose. There are basically no limits on the number of transaction an individual can have in a day. But, the bank will not be providing any interest on current accounts. Also, there is no fixed maturity date on these accounts as it runs on a continuous basis. Many transactions can be made under this account.

Fixed Deposit Account (for Investment Purpose)

Fixed deposit account or FD account is a type of bank account in which a certain sum of money will be deposited for a fixed period of time. In this type of account, the individual has to deposit the amount only once and the withdrawal has to be done after the time period is over.  However, one can withdraw the money before the fixed period but in such cases, the individual will pay a penalty for doing so. 

 So, these are the different types of bank accounts. Choose the account you want to open as per your need. 

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